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Bayer warns of full-year sales and earnings lower than forecast

Pharmaceuticals group blames shortfall on delay in completion of Monsanto takeover

Wed, Sep 5, 2018, 18:45

Bayer said it had counted on a stronger contribution from Monsanto to lift its full-year results. Photograph: Carlos Garcia Rawlins/Reuters

Bayer has warned that it would post lower full-year sales and earnings than originally predicted, as a result of delays to the completion of its $63 billion takeover of US rival Monsanto.

Shares in the German pharmaceuticals and chemicals group were 2 per cent lower at €78.80 in afternoon trading on Wednesday, as investors digested the latest piece of bad news linked to the Monsanto transaction. The stock fell to a five-year low last month, after a California court ruling that found a direct link between two Monsanto weedkillers and cancer.

Bayer said on Wednesday that it had counted on a stronger contribution from Monsanto to lift its full-year results. The US crops and seeds company traditionally generates about 60 per cent of its sales and 80 per cent of earnings in the first half of the year, but Bayer only started consolidating Monsanto’s results on June 7th.

The news came as the German group unveiled a 9 per cent rise in group sales to €9.48 billion for the second quarter, which was still helped in part by the first contribution from the US group.

Bayer said core earnings had also increased over the same period, despite adverse currency effects and a decline in its pharmaceuticals and consumer health operations.

Earnings before interest, tax, depreciation and amortisation rose 4 per cent to €2.34 billion, excluding special items. Quarterly net earnings fell sharply, however, from €1.22 billion in 2017 to €799 million this year, largely reflecting the spin-off of Covestro, Bayer’s material science division.